PHOENIX Banks need to convert their ATM fleets into modern financial services kiosks that become new profit centers because legacy payments systems are looking more out of touch with modern expectations.
In particular, ATMs need to reduce downtime, said Brian Hardaway, senior director of sales for banking technology provider BPC USA. In the current world of social media, news about a malfunctioning ATM or a fleet of malfunctioning ATMs can spread so quickly that a bank has no time to react to the rush of bad publicity, he said.
"A bank's IT team can resolve an ATM problem in about an hour, which we think is pretty fast, but social media changes that game," Hardaway said during a presentation Oct. 21 at SourceMedia's PayThink conference.
"But the first Tweet can go out on that problem in 12 seconds, and it names the bank," Hardaway said. Before long, a reporter can be calling a bank CEO who has no idea his ATM fleet is not working, Hardaway added.
Banks should also consider software updates that turn ATMs into smart devices able to handle a number of tasks, Hardaway said.
An ATM that can sell and issue virtual prepaid cards for consumers to use in e-commerce would help banks capitalize on the growing penetration of prepaid cards in the market, Hardaway said.
The Federal Reserve Bank of Philadelphia conducted recent research that indicates the millennial age group is rapidly adopting prepaid cards for their wealth management needs.
Modern ATMs can also support money transfers to other consumers, Hardaway said. Banks can partner with Western Union to develop that service, linking the ATM network into WU's money wiring network, Hardaway said.
BPC recently launched its SmartVista system in Russia for automating payment switching and routing, as well as ATM and point of sale management.
Even as mobile and e-commerce grow, consumers will continue to use ATMs to withdraw cash, Hardaway said.
"Cash is easy to carry, it is anonymous and it will work in all instances," he added. "The death of cash is a long ways off."
Even so, as consumers shift their spending habits away from cash, ATMs risk becoming less profitable, Hardaway said.
Banks can reduce costs in operating ATMs by more closely monitoring how much cash is in each ATM, Hardaway said. BPC studied a fleet with 1,000 ATMs and found that it was possible to reduce the amount of money in each one by $2,000 per year.
ATM platforms that provide comprehensive monitoring of ATMs are vital to banks, Hardaway said. "The same software that guides consumers to the nearest ATM can be used to inform the banks about how much money is in each one," he added.